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Supreme Court to Decide if DOL Review Board Properly Expanded SOX Whistleblower Protection to Public Company Contractor Employees

June 4, 2013

By Scott J. Wenner

Commentators, including this blog, have observed that since Obama Administration appointees assumed majority status on the Administrative Review Board (ARB), an appellate panel established within the U.S. Department of Labor (DOL), the panel has shifted its stance dramatically and in favor of increasing employee rights and employer exposure.

The ARB hears appeals from decisions of OSHA administrative law judges assigned by Congress to decide claims under a host of whistleblower laws, including the Sarbanes-Oxley Act (SOX).

A prominent example of a marked expansion of the coverage of SOX §806 embraced by the ARB is its decision exactly one year ago in Spinner v. David Landau & Associates, LLC, ARB Nos. 10-111, 10-115 (May 31, 2012). Spinner declared that even though by its terms SOX applies to public companies, the ARB would also apply §806 to protect whistleblower employees of privately-held companies that have contracts with publicly-traded companies.

In reaching this conclusion, the ARB adopted the position advocated by the U.S. Department of Labor. However, Spinner directly conflicted with the decision of the U.S. Court of Appeals for the First Circuit several months earlier in Lawson v. FMR LLC, 670 F.3d 61 (1st Cir. 2012). In Lawson, the court found the DOL’s more expansive view of SOX’s coverage was incorrect and based on an unnecessary interpretation of an unambiguous provision. Thus, while the views of the agency charged with enforcing a law generally are given deference by a reviewing court, under established precedent the DOL’s broad interpretation of the scope of §806 was entitled to no deference and, accordingly, received none from the court.

Last week, after obtaining the views of the Solicitor General, who was joined by Solicitor of Labor Smith, the Supreme Court took up the case for review. The Government’s position was nuanced: while predictably criticizing the First Circuit’s decision as erroneous, its brief opposed Supreme Court review as the First Circuit was the only appellate court to consider the question so there was no conflict among the circuits. The Government also declared, in so many words, that no future claimant would be harmed because the ARB and the DOL both would ignore the First Circuit’s view and continue apply Spinner.

What Will the Supreme Court Decide?

The Court accepted review specifically to consider “whether an employee of a privately held contractor or subcontractor of a public company is protected from retaliation by Section 806 of the Sarbanes-Oxley Act.”

Subsumed within this important issue is a second issue – one that is particularly timely in view of claims by employers of overreaching by the Administration in connection with appointments to and actions by the National Labor Relations Board and the DOL. To resolve the primary issue, the Court should have to discuss and resolve the amount of deference the courts owe to ARB and/or DOL interpretations of the whistleblower laws – and perhaps other laws – these agencies administer. The Court’s resolution of both issues in the 2013-14 term will be of consequence to employers.

For more information regarding this or other labor and employment issues, please contact Scott J. Wenner,  chair of Schnader’s Labor and Employment Practices Group. 

The materials posted on Schnader.com and SchnaderWorks.com are prepared for informational purposes only and should not be considered as providing legal advice or creating an attorney-client relationship. Please see our disclaimer page for a full explanation.

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